11 Cheap Gold Stocks To Buy According to Analysts

Published on August 14, 2023 at 7:02 am by Affan Mir in Hedge Funds, News

In this article, we discuss the 11 cheap gold stocks to buy according to analysts. To skip the detailed analysis of the gold industry, go directly to the 5 Cheap Gold Stocks To Buy According to Analysts.

Gold is considered one of the biggest safe haven assets. In 2022, the international demand for gold was around 3,303 metric tons which shows a significant improvement from 2020 when the pandemic triggered a drop in gold demand to 2,301 metric tons, the lowest since 2010. China and India are the countries with the highest gold consumption as of 2022.

Despite being considered an inflation hedge, gold has shown a high amount of volatility. One of the main reasons is that interest rate hikes have an adverse effect on the prices of precious metals. However, 2023 has been a good year for gold and its per-ounce price rose by 5.4% in the first half of 2023, closing at $1,912.25 per ounce in June. We can see that the gold rates are rising even with the rising interest rates which usually isn’t the case for precious metals. This can be attributed to the fact that investments in gold are considered to be more secure and safe during economic crises. At the time of writing on August 2, per ounce gold price closed at $1934.50.

According to an Invesco survey of the central bank and sovereign wealth funds, several countries are retrieving their gold stored outside of their countries in light of sanctions imposed by the West on Russia. Around 60% of the survey participants believe gold to be more attractive and 68% of the participants were keeping reserves in their country, up from 50% in 2020.

Industry Outlook

At the end of June, the European Central Bank and the Bank of England increased interest rates, while the US Federal Reserve took a break from the hike only to raise it by 25 bps in July. Experts believe that the hikes are nearing an end which bears good news for precious metals, including gold and silver.

Nevertheless, the recession fears have slightly eased but still aren’t over and during these times gold’s intrinsic value is much more attractive than other investments such as stocks and bonds. While all other stocks and bonds become a little unappealing, gold stocks can be expected to do well due to the rising demand for yellow metal.

Moreover, companies like Centerra Gold Inc. (NYSE:CGAU) and Newmont Corporation (NYSE:NEM) seem quite positive about their H2 2023 performance in terms of revenue and production. At its Q2 2023 earnings call, Newmont Corporation (NYSE:NEM)’s Chief Executive Officer, Tom Palmer said:

“As planned, higher gold production is expected in the second half of the year, and will be driven by higher grades and tonnes mined from both Subika Underground and open pit at Ahafo. Higher grades and tonnes mined Cerro Negro is the first wave of our district expansion which comes online in the third quarter. Higher tonnes mined and processed at Tanami, where we will mine the highest grades for the year in the fourth quarter.”

11 Cheap Gold Stocks To Buy According to Analysts

Photo by Gold-bar-jingming-pan on Unsplash

Our Methodology

For this article, we chose 11 companies that have significant operations in the gold industry based on their average analyst price targets as of the August 2 market close. We omitted the companies with less than $1 billion market cap and only chose the companies that had more Buy or Overweight ratings than Hold and Sell. The stocks in this article have been listed in ascending order of the upside potential based on their average analyst price targets. The average analyst price targets were taken from Tipranks.

For a better understanding of these stocks, we also discussed the hedge fund sentiment of most of these stocks which was taken from Insider Monkey’s database of 943 elite hedge funds.

Cheap Gold Stocks To Buy According to Analysts

11. Agnico Eagle Mines Limited (NYSE:AEM)

Upside: 27.60%

Average Price Target: $62.04

Agnico Eagle Mines Limited (NYSE:AEM) is a gold production company operating in Canada, Finland, Australia, and Mexico. In the US, the company is involved in exploration and development activities. Agnico Eagle Mines Limited (NYSE:AEM) was founded in 1953 and is headquartered in Ontario, Canada.

In the last three months, Agnico Eagle Mines Limited (NYSE:AEM) has been covered by 7 analysts and all of them maintain a Buy or Overweight rating on the company stock. The average analyst price target of $62.04 represents a 27.60% upside to Agnico Eagle Mines Limited (NYSE:AEM)’s stock price of $48.62 at the August 2 market close.

In the second quarter, Agnico Eagle Mines Limited (NYSE:AEM) reported a non-GAAP EPS of $0.65, exceeding the analysts’ expectations by 9 cents. The company’s revenue of $1.72 billion represented an almost 9% year-over-year growth after the company achieved record gold production. Agnico Eagle Mines Limited (NYSE:AEM)’s gold production in Q2 2023 was 1.686 million ounces compared to 1.519 million ounces in Q2 2022.

Sibanye Stillwater Limited (NYSE:SBSW), B2Gold Corp. (NYSE:BTG), and Sandstorm Gold Ltd. (NYSE:SAND) are some of the cheap gold stocks according to analysts along with Agnico Eagle Mines Limited (NYSE:AEM).

Old West Management made the following comment about Agnico Eagle Mines Limited (NYSE:AEM) in its Q4 2022 investor letter:

“Agnico Eagle Mines Limited (NYSE:AEM) is the third largest gold miner in the world with mines in Canada, Australia, Finland, and Mexico. Although we have long respected the company, we became shareholders when they acquired our portfolio holding, Kirkland Lake Gold. Agnico chairman Sean Boyd is one of the most respected executives in the mining industry. He was appointed CEO in 1998 and was recently appointed Executive Chairman. Boyd is a large shareholder and perfectly fits our owner/manager role. This year the company is projected to make nearly $1 billion in net income on $5.8 billion in revenue with $758 million of free cash flow. Net income has been growing 15% per year for several years. Agnico has a fortress balance sheet with $1.3 billion of long term debt, which is only 2 times EBITDA, and $820 million cash in the bank. The stock trades at $55 per share, which is 26 times earnings with a 2.9% dividend yield.”

10. Wheaton Precious Metals Corp. (NYSE:WPM)

Upside: 30.28%

Average Price Target: $55.07

Wheaton Precious Metals Corp. (NYSE:WPM) is a Canadian precious metals production company. As of December 2022, the company has proven and probable gold reserves of 13.90 million ounces, 489.2 million ounces of silver, 33.2 million pounds of cobalt, 600,000 ounces of palladium, and 170,000 ounces of platinum.

Wheaton Precious Metals Corp. (NYSE:WPM)’s latest growth prospect is its gold stream agreement with Lumina Gold for the Cangrejos gold-copper mine in Ecuador for $300 million. Wheaton Precious Metals Corp. (NYSE:WPM) is expected to buy 6.6% of Cangrejos gold-copper mined till the delivery of 700,000 ounces of gold, which will then be reduced to 4.4% of the gold production till the mine exhausts. The life of the mine is expected to be 26 years.

Wheaton Precious Metals Corp. (NYSE:WPM) has been covered by 8 analysts in the last three months with 5 Buy and 3 Hold ratings and an average price target of $55.07 compared to $42.27 at the August 2 market close.

White Falcon Capital Management made the following comment about Wheaton Precious Metals Corp. (NYSE:WPM) in its second quarter 2023 investor letter:

“Precious Metals Royalty basket (Wheaton Precious Metals Corp. (NYSE:WPM), SSL, TFPM): In the current macroeconomic environment, there are many ways to ‘win’ with gold. It is remarkable that even with record positive real yields, gold is flirting with all time highs. Why? Western central banks are increasing interest rates which means that they will have to pay more interest on the record levels of debt that their government’s owe. Where will the money come from to pay the higher interest expense? The answer is simple – more debt and more money printing! We believe the gold knows this! We believe that precious metals will protect real purchasing power and act as a hedge to the portfolio when macroeconomic uncertainty arises. Owning royalty companies at reasonable valuations gives us a high quality exposure to precious metals without project or cost inflation risks inherent in a mining company.”

9. Newmont Corporation (NYSE:NEM)

Upside: 32.71%

Average Price Target: $53.96

Newmont Corporation (NYSE:NEM) is a mining company primarily focusing on gold. The company also produces copper, silver, zinc, and lead. Its gold mines are located in the US, Canada, Mexico, Argentina, Peru, Australia, Ghana, the Dominican Republic, and the Republic of Suriname. Based on the coverage by 11 analysts, Newmont Corporation (NYSE:NEM)’s average price target stands at $53.96, registering an upside of 32.71% from its stock price at the market close of August 2.

Newmont Corporation (NYSE:NEM) was held by 52 hedge funds in Q1 2023 at a combined value of $628.372 million. First Eagle Investment Management was its most prominent hedge fund holder for the first quarter in a row with over 18.43 million shares worth $903.453 million.

On July 20, Newmont Corporation (NYSE:NEM)’s Board of Directors announced a $0.40 quarterly dividend payable by September 21 to the shareholders of record on September 7. At the time of writing on August 2, the company has a dividend yield of 3.94%.

8. SSR Mining Inc. (NASDAQ:SSRM)

Upside: 38.49%

Average Price Target: $19.97

SSR Mining Inc. (NASDAQ:SSRM) is a Colorado-based mining company formerly known as Silver Standard Resources. The company’s products include gold, silver, copper, lead, and zinc. SSR Mining Inc. (NASDAQ:SSRM) has been covered by 3 analysts in the last three months and all of them maintain a Buy or Outperform rating on the stock. Their average price target of $19.97 represents a 38.5% upward change from the August 2 market close stock price of $14.42, bringing the company to the 8th spot on our list of cheap gold stocks to buy according to analysts.

SSR Mining Inc. (NASDAQ:SSRM) is expected to increase its gold and copper production after it announced the acquisition of 40% interest and immediate operational control in the Hod Maden gold-copper development project. The production from the mine is expected to start in 2027 and will likely add attributable 80,000 gold equivalent ounces and $66 million in free cash flow annually for SSR Mining Inc. (NASDAQ:SSRM).

7. Osisko Gold Royalties Ltd (NYSE:OR)

Upside: 41.80%

Average Price Target: $19.88

Osisko Gold Royalties Ltd (NYSE:OR) holds royalties on gold, silver, and diamond mines. The company’s business model is one of its most attractive features. Most of the company’s revenues are generated through royalties which lower the company’s expenses and allow high margins.

On July 28, Osisko Gold Royalties Ltd (NYSE:OR) announced that it has entered into a binding agreement to acquire a 1% copper net smelter return royalty and a 3% gold net smelter return royalty from Chile’s Hot Chili Ltd.’s Costa Fuego copper-gold project. The acquisition is valued at $15 million. This deal can become a significant growth catalyst for Osisko Gold Royalties Ltd (NYSE:OR). According to the company, Hot Chili’s preliminary economic assessment forecasts the mine’s life at 16 years and it is expected to produce 49,000 ounces of gold and 95 kilotonnes of copper per annum for the first 14 years.

Osisko Gold Royalties Ltd (NYSE:OR)’s average analyst price target of $19.88 shows a 41.8% upside to the company’s August 2 market close stock price of $14.02. Out of 4 analysts that have covered the company, 3 maintain a Buy or Overweight rating on Osisko Gold Royalties Ltd (NYSE:OR)’s stock.

Palm Valley Capital Management made the following comment about Osisko Gold Royalties Ltd (NYSE:OR) in its Q1 2023 investor letter:

“We did not purchase any new holdings for the Fund during the first quarter. In January, we sold one position: Osisko Gold Royalties Ltd (NYSE:OR). Osisko reported record royalty and streaming revenues as it has steadily grown its portfolio of assets, which is skewed toward Canada—considered to be the highest quality jurisdiction for miners. The company recently deconsolidated the results of mining developer Osisko Development from its financials, clarifying Osisko Royalties’ business model for less familiar investors. Each quarter, we update the company’s NAV based on the underlying value of each of its key royalty and streaming interests, in addition to the net financial assets it holds. Osisko’s share price exceeded our estimate of NAV, so we sold the position.”

6. Pan American Silver Corp. (NYSE:PAAS)

Upside: 41.87%

Average Price Target: $22.26

Pan American Silver Corp. (NYSE:PAAS) is a gold, silver, zinc, copper, and lead mining company headquartered in Vancouver, Canada. The company operates in Mexico, Peru, Bolivia, and Argentina. The average analyst price target of $22.26 shows a 41.87% change in Pan American Silver Corp. (NYSE:PAAS)’s August 2 stock price and takes the 6th spot on our list of cheap gold stocks.

Pan American Silver Corp. (NYSE:PAAS) stock was held by 19 hedge funds in Q1 2023. In the quarter, Arctis Global, Springbok Capital, LMR Partners, Sciencast Management, and Contrarius Investment Management added the company stock to their investment portfolio.

On July 31, Pan American Silver Corp. (NYSE:PAAS) announced the sale of its 56.25% stake in the Argentinian Mara copper project to Glencore (GLCNF) for $475 million in cash and net smelter return royalty of 0.75%. Pan American Silver Corp. (NYSE:PAAS) also agreed to sell two of its other non-core assets in Peru and Chile.

Pan American Silver Corp. (NYSE:PAAS) is one of the most noteworthy cheap gold stocks to buy according to analysts along the likes of Sibanye Stillwater Limited (NYSE:SBSW), B2Gold Corp. (NYSE:BTG), and Sandstorm Gold Ltd. (NYSE:SAND).

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